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Investing for Retirement with a Roth IRA

Radio Transcript, 60 seconds, for use during week of Feb. 18.

This is an Invest Wisely minute brought to you by Iowa State University Extension.

Roth individual retirement accounts, or IRAs, are available to anyone with earned income of less than 166 thousand dollars for a couple. 

Roth contributions are always made with after-tax money. All earnings within a Roth are tax-free if withdrawn after age 59 1/2, not tax-deferred as in a traditional IRA. Because you have already paid tax on your contributions, you can withdraw your contributions at any time without incurring a penalty or tax.

Other advantages of the Roth -- if you die with a balance in your Roth IRA, it goes to your heirs tax-free, unlike the traditional IRA, where your heirs will owe tax.

Invest Wisely comes from Iowa State University Extension through a grant from the Investor Protection Trust providing investor education on the web at investorprotection.org.

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Updated February 18, 2008